Station Casinos offers to exchange 10% loans for five series of notes

By Susanna Moon

Chicago, Nov. 25 - Station Casinos, Inc. said it began private exchange offers for new 10% senior secured term loans due 2016 and new 10% junior secured term loans due 2016 to holders of its 6% senior notes due 2012, 7¾% senior notes due 2016, 6½% senior subordinated notes due 2014, 6 7/8% senior subordinated notes due 2016 and 6 5/8% senior subordinated notes due 2018.

For each $1,000 principal amount, the company said it will pay $540 for the 6% notes, $540 for the 7¾% notes, $200 for 6½% notes, $200 for 6 7/8% notes and $200 for 6 5/8% notes.

Payout includes a consent fee of $30.00 for notes tendered by the early deadline of 5 p.m. ET on Dec. 5.

Acceptance of the notes under the exchange offer is subject to proration.

Station will issue up to $459 million principal amount of senior secured term loans in exchange for the 6% and 7¾% notes.

If the maximum amount has not been reached, Station will issue senior secured term loans in exchange for 6½%, 6 7/8% and 6 5/8% notes tendered.

Finally, Station will issue junior secured term loans in exchange for all remaining notes tendered in the offer for up to 90% of the principal amount of the old notes on a pro rata basis.

The company said it reserves the right to increase the maximum or decrease the minimum principal amount of notes accepted in the exchange offer prior to midnight ET on Dec. 5.

The loans will be guaranteed by subsidiaries of the company and will be secured by substantially all of the assets of the company and restricted subsidiaries.

Concurrently with the issuance of the loans, the company will borrow between $450 million and $500 million from entities affiliated with the company's equity owners or investors in related entities that currently own an indirect economic interest in the company, according to a press release.

The receipt of the loans from sponsors are expected to be provided as a new tranche of loans under the company's senior secured credit facility with Deutsche Bank Trust Co. Americas as administrative agent and collateral agent will be permitted to be paid interest in-kind rather than in cash, will be secured by a second-lien on the collateral securing the company's senior secured credit facility and are a condition to the completion of the offer.

The company said it is in discussions with sponsors regarding the terms of loans, but has not received any commitments for the extension of the loans, and there can be no assurances that such loans will be obtained.

The lien securing the loans will be junior to the liens securing the company's obligations under its senior secured credit facility and the $450 million to $500 million of sponsor loans.

To the extent that 82.5% or more of the notes are tendered for exchange, the sponsor loans would take the form of junior unsecured subordinated notes, which will be permitted to be paid interest in-kind rather than in cash and will mature later than and rank junior to the term loans.

The purpose of the offer and new financing is to significantly reduce the outstanding principal amount of debt and cash interest expense, Station said.

The offer is conditioned on at least 60% principal amount of notes being tendered. Station reserves the right to waive any and all conditions of the offer and the consent solicitation by the acceptance date.

The offer is being made only to qualified institutional buyers and to certain non-U.S. investors.

D.F. King & Co., Inc. (800 628-8532 or collect 212 269-5550) is the information agent.

Station is a Las Vegas-based gaming and entertainment company.

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